Today’s recommendation is an insurance company with a strong chart and shareholder-friendly policies.
American Financial Group (AFG)
from The Buyback Letter
American Financial Group is an insurance holding company based in Cincinnati, Ohio, with assets in excess of $35 billion. Through the operations of Great American Insurance Group, AFG sells property and casualty insurance, focusing on specialized commercial products for businesses. It also sells fixed and fixed-indexed annuities in the retail, financial institutions and education markets.
It’s a component of the Russell 3000, and actually has a larger market cap than the smaller end of the S&P 500. Market cap, of course, is important because it gives a true comparison of the value attributed by the stock market to a given company’s stock.
In late August, AFG increased its annual dividend by 12.8%. The company will now pay an annual dividend of 88 cents per share, which translates into a quarterly cash dividend of 22 cents per share, up from 19 cents per share paid on July 25, 2013. This is the eighth consecutive year of dividend hikes.
Additionally, the company has been buying back shares and during the first six months of 2013, AFG repurchased 1.4 million shares for $70 million, which leaves 6.1 million shares to be bought under the present authorization. Cash and cash equivalents at the end of Q2 2013 were $1.3 billion. AFG has reduced shares outstanding by 5.3% in the past 12 months. Buy.
David R. Fried, The Buyback Letter, 888-289-2225, September 19, 2013